Correlation Between International Equity and William Blair
Can any of the company-specific risk be diversified away by investing in both International Equity and William Blair at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining International Equity and William Blair into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Equity Portfolio and William Blair International, you can compare the effects of market volatilities on International Equity and William Blair and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in International Equity with a short position of William Blair. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Equity and William Blair.
Diversification Opportunities for International Equity and William Blair
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between International and William is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding International Equity Portfolio and William Blair International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on William Blair Intern and International Equity is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on International Equity Portfolio are associated (or correlated) with William Blair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of William Blair Intern has no effect on the direction of International Equity i.e., International Equity and William Blair go up and down completely randomly.
Pair Corralation between International Equity and William Blair
Assuming the 90 days horizon International Equity Portfolio is expected to generate 0.98 times more return on investment than William Blair. However, International Equity Portfolio is 1.02 times less risky than William Blair. It trades about 0.32 of its potential returns per unit of risk. William Blair International is currently generating about 0.24 per unit of risk. If you would invest 1,020 in International Equity Portfolio on November 9, 2024 and sell it today you would earn a total of 59.00 from holding International Equity Portfolio or generate 5.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Equity Portfolio vs. William Blair International
Performance |
| Timeline |
| International Equity |
| William Blair Intern |
International Equity and William Blair Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Equity and William Blair
The main advantage of trading using opposite International Equity and William Blair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Equity position performs unexpectedly, William Blair can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in William Blair will offset losses from the drop in William Blair's long position.| International Equity vs. T Rowe Price | International Equity vs. Causeway International Value | International Equity vs. Short Term Fund Administrative | International Equity vs. Miller Opportunity Trust |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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